United Voice v Serco Sodexo Defence Services Pty Ltd
[2014] FCCA 2717
•27 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| UNITED VOICE v SERCO SODEXO DEFENCE SERVICES PTY LTD | [2014] FCCA 2717 |
| Catchwords: INDUSTRIAL LAW – Different definitions of “shiftworker” in enterprise agreement – different leave benefits specified to apply to different categories of shiftworkers – issue to determine whether the terms of the enterprise agreement are contrary to provisions of the National Employment Standards (NES) and contrary to s.87(1)(b)(ii) of the Fair Work Act2009 – principles of construction and interpretation of statute and of enterprise agreements. |
| Legislation: Acts Interpretation Act 1901, ss.15AA, 15AB Fair Work Act 2009, ss.3, 12, 55, 56, 87(1)(b)(ii), 171, 172(1) & (2), 185, 186, 187, 196, 209 – 211, 217 |
| Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Shop, Distributive and Allied Employees’ Association v Woolworths Ltd [2012] FCA 540 Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148 D.C. Pearce & R.S. Geddes, Statutory Interpretation in Australia (Seventh Edition) (Sydney: LexisNexis Butterworths, 2011) |
| Applicant: | UNITED VOICE |
| Respondent: | SERCO SODEXO DEFENCE SERVICES PTY LTD |
| File Number: | CAG 24 of 2013 |
| Judgment of: | Judge Neville |
| Hearing date: | 5 June 2014 |
| Date of Last Submission: | 19 September 2014 |
| Delivered at: | Canberra |
| Delivered on: | 27 November 2014 |
REPRESENTATION
| Solicitors for the Applicant: | Maurice Blackburn, Sydney |
| Solicitors for the Respondent: | Ashurst Australia, Canberra |
ORDERS
The Application (filed 14th May 2013) and Statement of Claim (and all of its iterations, culminating in the Third Amended Statement of Claim, filed 14th March 2014), be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAG 24 of 2013
| UNITED VOICE |
Applicant
And
| SERCO SODEXO DEFENCE SERVICES PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The Application before the Court seeks to resolve what is said to be a dispute or contest about the interpretation of particular terms in a single-enterprise agreement in the light of the National Employment Standards (“the NES”) that are set out in Part 2-2 of the Fair Work Act2009 (“the Act”). It is decidedly, a very discrete point in issue.
More particularly, among other things, it is said by both sides that the determination required will be the first consideration [by any Court] of s.87(1)(b)(ii) of the Act.
The Applicant, who is a signatory to it, says that the enterprise agreement (the Serco Sodexo Defence Services Pty Ltd Collective Agreement 2011: “the agreement”; it became Exhibit A) contains an “artificial distinction” between “continuous” and “non-continuous” shift workers, the former being entitled to five weeks annual leave, and the latter to [only] four weeks annual leave.
The Applicant further says that the distinction in the agreement is repugnant to or offends the NES.
The Applicant also says that, by virtue of the operation of the agreement, the Respondent has breached s.87(1)(b)(ii) of the Act. That section provides, in terms:
(1) For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
(b) 5 weeks of paid annual leave, if:
…
(ii) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
…
Although I make no formal point about it (nor did anyone else), there is a certain irony (to put it as neutrally as possible) that the current Application is brought by one of the two unions, which [now] argues that the Respondent has contravened the Act by virtue of the terms of the agreement. Yet, as I have already noted, the Applicant was and remains a signatory to the agreement which it now seeks to impugn. It would be too gauche to suggest that it is an instance of the old adage of “having one’s cake and eating it too.”
The Respondent says that (a) there is nothing ambiguous, or logically absurd, about the terms and application of the agreement, (b) there is nothing repugnant to, nor is there any inconsistency between, the operation of the agreement and the NES, and therefore (c) there is no breach of the Act as alleged. Consequently, the Respondent submits, the Application should be dismissed.
As already noted, the Court was advised that this is the first time that s.87(1)(b)(ii) has been the subject of any judicial determination. In those circumstances, I invited the parties to consider the matter being transferred/referred to the Federal Court of Australia for determination by that Court. That “offer” or invitation was declined.
In my view, there are a number of impediments to the success of the Application. Summarily stated, the most prominent of those impediments are as follows.
First, I do not accept the Applicant’s submission that there exists an “artificial distinction” between continuous and non-continuous shift workers; both kinds of shiftworker are clearly defined in the agreement. Respectfully, either there is a real distinction or there is not. Put rhetorically, why would the agreement have been drafted so as to recognise shiftworkers who are employed on a continuous basis and others who are not so employed? According to authorities of long-standing noted later in these reasons, the “industrial reality” of such common-place distinctions is something to which the Court should have regard.
Secondly, presumably those responsible for drafting the agreement, including the Applicant, turned their minds to the distinction between the various classifications of shiftworkers. Similarly, in concluding the agreement, presumably those same industrially astute and experienced minds (I mean here to refer particularly to the Respondent and the two unions – noted below - all signatories to the agreement) were properly turned or tuned to such distinctions. One such consideration would, one might reasonably assume, have been that “continuous shift workers” should be entitled to one extra week of leave. Similarly, subject to what is said later in these reasons, the Court may reasonably assume that, in accordance with the requirements of s.186 of the Act, the approval of the agreement by Fair Work Australia (“FWA”) indicated the requisite level of satisfaction of compliance with the Act. While obviously not decisive, it seems to me that such a process and approval is nonetheless a relevant consideration.
Thirdly, to elide, or worse to ignore, the distinction between shiftworkers as defined in the agreement would unfairly discriminate against those workers who are properly entitled to an extra week of leave precisely because of the nature of their work, recognised in the definition of “continuous shiftworker”, as opposed to the responsibilities recognised by the definition of “non-continuous shiftworker.”
Also stated rhetorically, why should “non-continuous shiftworkers” receive entitlements identical to persons who are employed as “continuous shiftworkers”? To give the former the same entitlements as the latter would, in my view, discriminate unfairly against persons employed as “continuous shiftworkers.”
Fourthly, the argument of the Applicant would require the Court to excise from s.87(1)(b)(ii) the words “for the purposes of the National Employment Standards.” Such a construction would also require, as a matter of statutory consistency, that the same words to be deleted from s.196 of the Act. According to authority (noted below) such a course is not warranted as the words and operation of the section are clear and without ambiguity. Without clear and compelling evidence why the Court should adopt such a radical approach to the construction of the section, in my view, to follow such a course is not only not warranted on the agreed facts and the clear words of the section (and the agreement), it is also contrary to established authority.
The conclusion to which I have come follows (and flows from), in general terms, the interpretative approach propounded by and the comments of French J (as his Honour then was) in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union, and most recently by the Full Court of the Federal Court of Australia in Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd, both of which are discussed in detail later in these reasons.[1]
[1] City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 at [53] & [57] (“Wanneroo No.2”); Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148.
For reasons set out below, the Application is not made out and therefore should be dismissed.
Agreed Factual Background
The following paragraphs ([17] – [32]) are taken from the agreed statement of facts filed on 11th March 2014.
The Respondent employed:
i)Stewart MacKenzie on 9 March 2010;
ii)Ray Wilburger on 26 January 2007; and
iii)Terry Wilson on 1 October 2006.
iv)Darren Mead on 1 October 2006.
(‘collectively ‘the employees’)
The Respondent remains the employer of the employees.
The Serco Sodexo Defence Services Pty Ltd ACT Collective Agreement 2011 has covered and applied to the Respondent since 7 June 2011 (‘the agreement’).
The agreement is an enterprise agreement within the meaning of Part 2-4 of the Fair Work Act (‘FW Act’).[2]
[2] As earlier indicated, all future references to “the Act” should be taken to be reference to the Fair Work Act 2009.
The agreement covers and applies to the employment of the employees.
From 7 June 2011, Clause 7 ‘Definitions’ of the agreement provided:
Shift Worker/Non-Continuous Shiftworker – means an employee specifically employed on a designated day, evening or night shift in accordance with a shift roster and who does not continuously work over 7 days a week, 24 hours per day including working public holidays and weekends.
From 7 June 2011, Clause 7 ‘Definitions’ of the agreement provided:
Continuous Shiftworker’ means an employee who continuously works shifts over 7 days per week, 24 hours per day and works public holidays and weekends.
From 7 June 2011, Clause 30.1.1 provided:
An employee other than a casual employee and continuous shift worker are entitled to 4 weeks paid annual leave for each 12 months of continuous service and will accrue annual leave on a pro rata basis at the end of each fortnight.
From 7 June 2011, Clause 30.1.3 provided:
A continuous shift worker (as defined) will receive an additional week’s annual leave.
From 1 January 2010, the National Employment Standards (“NES”) contained in Part 2-2 of the FW Act applied to the Respondent and:
i)Ray Wilburger;
ii)Terry Wilson; and
iii)Darren Mead.
From 9 March 2010, the NES contained in Part 2-2 of the FW Act applied to Stewart MacKenzie.
The NES sets minimum standards that apply to the employment of the employees which cannot be displaced by the agreement.
The employees were from 7 June 2011 entitled to annual leave in accordance with the NES and the agreement.
Section 87(1)(b)(ii) of the FW Act states that for each year of service with his or her employer, an employee is entitled to 5 weeks of paid annual leave if an enterprise agreement applies to the employee and defines or describes the employee as a shift worker for the purposes of the NES.
From 7 June 2011, the employees:
i)were employed by the Respondent and directed to work as Catering Attendant Level 6 employees;
ii)may have been referred to as chefs by people within the Respondent's organisation;
iii)Worked shifts in accordance with shift rosters which resulted in them being defined as Shift worker/non-continuous Shift workers for the purposes of the agreement.
From 7 June 2011, the employees were provided with an accrual of four weeks annual leave per year of service and not the 5 weeks annual leave claimed through the application.
Questions/Issues for Determination
There were various iterations of the claim, culminating in the third amended statement of claim filed on 14th March 2014. To concretise and focus the parameters of it, the Court directed the parties to provide specific questions/issues to be determined. Regrettably, no consensus was reached regarding the questions/issues, with both parties providing their own versions of the matters in issue.
In the Applicant’s case, the questions/issues were formulated in the following terms:
1) Are the National Employment Standards socially beneficial legislation such that in the case of ambiguity it should be given a liberal interpretation in favour of employees?
2) In order for the entitlement the subject of the proceedings to flow must the Enterprise Agreement contain the words ‘for the purposes of the NES’?
3) Does the 2011 Enterprise Agreement define or describe each of the employees as a shiftworker for the purposes of the NES?
The Respondent framed the questions/issues as follows:
1) Does the Serco Sodexo Defence Services Pty Ltd Collective Agreement 2011 (2011 Enterprise Agreement) define or describe each of the employees named in Schedule 1 of the Application (the Employees) as a shiftworker for the purposes of the NES?
2) In order for the Court to find that the Employees are entitled to 5 weeks' annual leave pursuant to s.87 (1)(b)(ii) of the Fair Work Act 2009, must the 2011 Enterprise Agreement contain the express words ‘for the purposes of the NES’ in its definition/description of the Employees?
3) If the Court's answer to question 2 is “no” must the 2011 Enterprise Agreement nonetheless identify, define or describe the Employees as being shiftworkers who are entitled to 5 weeks annual leave or entitled to the NES shiftworker entitlement in order for the Court to find that the Employees are entitled to 5 weeks' annual leave pursuant to s.87 (1) (b) (ii)?
4) In circumstances where an enterprise Agreement, on its terms, distinguishes between classes or categories of shiftworkers and provides that not all shiftworkers covered by the Agreement are entitled to 5 weeks annual leave but restricts that entitlement to a certain class or category of shiftworker - does that enterprise Agreement contravene the Fair Work Act 2009 by failing to provide that all shiftworkers are entitled to 5 weeks annual leave per year of service?
In addition to oral argument, both parties filed (a) written submissions, (b) submissions in relation to the questions/issues, and (c) written submissions in relation to further questions posed by the Court, essentially regarding the applicability of certain High Court and Federal Court of Australia authorities not previously mentioned by the parties. These final written submissions were filed by 19th September 2014.
The Applicant’s Primary Submissions
The Applicant’s primary argument may be summarised as follows.
First, the essential point in dispute is that the Applicant alleges that the employees the subject of the proceedings are entitled to five weeks annual leave, while the Respondent contends that they are entitled only to four weeks.
Secondly, the National Employment Standards are minimum standards that apply to the employment of employees covered by the Act, and these NES standards cannot be displaced.
Thirdly, there is no dispute (the Applicant says) that the relevant employees are classified as shiftworkers in the agreement.
Fourthly, the NES does not draw any distinction between continuous and non-continuous shiftworkers, but the agreement does. The NES only recognises the single category of “shiftworker.”
Fifthly, the fact that the drafters of the agreement chose to distinguish between types of shiftworkers (a) is a matter for those who drafted the agreement, but (b) in accordance with the terms of s.56 of the Act, the effect of the agreement cannot derogate from the NES and its set of minimum provisions.
Next, the object and purpose of both the NES and the Act further support, so it is said, the entitlement of the [non-continuous] shiftworkers to five weeks leave, otherwise they, in effect and in practice, would be discriminated against vis-à-vis shiftworkers who are employed in/on a “continuous” capacity.
In short, the “ordinary meaning” of shiftworker should apply, without distinction between categories of those workers, so the Applicant said.
In passing, I note that among the orders sought are that “the employees the subject of the Application have, since in or around 7th June 2011, been entitled to accrue (and or be paid) 5 weeks annual leave per year of service.” The original Application was not filed until 14th May 2013. How and why it took just on two years to bring the Application in order to clarify the legitimacy of the different definitions of shiftworker in the agreement was not explained. Similarly without explanation was why there had been no application, pursuant to s.217 of the Act, to vary the agreement in circumstances where there is the alleged uncertainty or ambiguity complained of.
The Applicant’s Supplementary Submissions
In this section I will consider the Applicant’s comments in relation to the ‘questions for resolution’ (filed 10th July 2014) as well as the supplementary submissions (filed 19th September 2014).
Firstly, the Applicant submitted that the Act and the NES in particular are, and should be considered, “socially beneficial legislation”, and that accordingly, in the event of any ambiguity, such legislation should be construed liberally in favour of “injured employees.” Properly, the Applicant also noted, from the same relevant authority (Heerey J in Bortolazzo) that it was one thing to effect a “liberal interpretation” of a statute; it was quite another to rewrite the statute.[3]
[3] See Bortolazzo & Saffron v Comcare (1997) 75 FCR 385 at p.388 (Heerey J). In its submissions, the Applicant also referred to a number of authorities to support the proposition that “legislation making provision for long service leave has been previously held to be beneficial social legislation.” One authority cited is the Full Court decision in Endeavour Coal Pty Ltd v Construction, Forestry, Mining and Energy Union (2007) 165 FCR 1 at [44]. Unfortunately, the paragraph cited from Endeavour Coal by the Applicant simply and only refers to submissions made by the Respondent in that earlier case. That paragraph in Endeavour Coal contains no finding of the kind referred to by the Applicant.
It followed, it was submitted, that the NES and the entitlements it confers are made pursuant to socially beneficial legislation and “should be interpreted beneficially and not subjected to an overly literal construction.” The Applicant’s submission went on:
If the Court finds some ambiguity then it should be resolved in favour of affording a more generous entitlement rather than depriving employees of a benefit that was reasonably open on the words used in the award [sic].
I note that this submission is conditional upon the Court finding “some ambiguity.” I also note the error in the submission that refers to “words used in the award.” There is no award in play in the current proceeding.
The Applicant further contended that an enterprise agreement (such as the Serco agreement in the current matter) which distinguished between classes or categories of shiftworkers, which had the effect of providing for different annual leave entitlements, was a contravention of the NES and therefore of the Act.
Relying upon the comments of French J (as his Honour then was) in Wanneroo No.2, the Applicant emphasised the importance of interpreting an award in such a way that did not divorce it from “industrial realities.”[4]
[4] City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 at [57].
The Applicant repeated earlier submissions that (a) the NES set minimum standards which cannot be displaced; (b) the distinction in the agreement between different kinds of shiftworkers is an “artificial distinction” which, if permitted, would derogate impermissibly from the NES; and (c) the NES provide the “industrial reality” against which the terms of the agreement should be interpreted. To accept the submissions of the Respondent, said the Applicant, and the distinctions set out in the agreement, would have the effect of undermining the NES.
The Respondent’s Primary Submissions
The principal question posed by the Respondent for the Court’s determination was: “Does the 2011 Enterprise Agreement define or describe each of the Employees as a shiftworker for the purposes of the NES?” The Respondent submitted that the answer to this question was “no.” Respectfully, I agree, and largely (but not exclusively; my own reasons are set out later) for the submissions/reasons given by the Respondent. Those submissions/reasons are as follows.
The words “for the purposes of the NES” have been inserted into s.87(1)(b)(ii) deliberately and for a specific reason; accordingly, the words must be given proper consideration in the interpretation of the agreement. The Respondent submitted that the purpose of the words “for the purposes of the NES” is to limit the NES shiftworker entitlement to an additional week of annual leave only to those employees who are identified by their enterprise agreement as being a shiftworker “for the purposes of the NES.”
To interpose here: it seems to me that this argument could or would apply even more forcefully if the sub-paragraph is/was read as a whole with the following emphases: “5 weeks of paid annual leave if … (b) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards…”
The conjunction “and” should, in my view, perform its ordinary conjunctive function, and certainly neither ignored nor treated as a “hendiadys”.[5] No argument was put for any disjunctive interpretation of “and” in s.87(1)(b)(ii).
[5] Generally, see the comments of Beaumont J (with whom Wilcox and Lindgren JJ agreed) in Air Services Australia v Monarch Airlines Ltd (1998) 152 ALR 656 at p.679, as well as the comment by the learned authors in D.C. Pearce & R.S. Geddes, Statutory Interpretation in Australia (Seventh Edition) (Sydney: LexisNexis Butterworths, 2011) at [2.29]: “In ordinary speech the word ‘and’ is used conjunctively and the word ‘or’ disjunctively.”
In my view, the section, on its face in clear and unambiguous terms, prescribes a number of conditions or requirements before a shiftworker is entitled to the increased annual leave set out in s.87.
The Respondent puts the argument differently, but to similar effect. The Respondent submitted that the agreement does not define or describe each of the employees as a shiftworker “for the purposes of the NES.” Rather, in my words, the definitions of shiftworker in the agreement are for the purposes of the agreement, not for the purposes of the NES.
Next, the Respondent submitted that the distinctions between shiftworkers, for the purposes of the agreement, (in my words) clearly reflect the intention of the parties to the agreement. Further, to interpret them as proposed by the Applicant, and thereby give an extra week of leave to persons employed as “non-continuous shiftworkers”, would be to bring about a situation clearly not intended by the parties to the agreement.
By way of observation only at this stage, I note that, as the Full Court clearly spelt out in Toyota Motor Corporation v Marmara (noted below),[6] industrial agreements are not interpreted and understood in the same way and with the same precision that a ‘contract lawyer’ would usually approach a contract negotiated and entered into in a commercial setting. Nonetheless, and in accordance with the authorities noted later such as Wanneroo No.2, the industrial reality here was that two unions (one of them being the Applicant) agreed to the terms set out in the agreement.
[6] Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84.
Further, in my view, in clear terms the agreement takes nothing away from or reduces any entitlement of any worker employed under it. The argument of the Applicant seeks essentially (and only) to increase the entitlement of one category of shiftworker
The Respondent also submitted that the terms of the agreement are, in any event, perfectly clear, and without ambiguity.
After referring broadly to the general intention and purpose of the NES and modern awards, particularly the provision of a safety net for employees in the federal system, the Respondent referred to the Hospitality Industry (General) Award 2010, which (it was submitted) clearly envisages that many employees will be employed on a shift-work basis, but which limits entitlements under that award to seven day shiftworkers who are employed or who are regularly rostered to work on Sundays and public holidays.
The Respondent also noted that clause 34.1 of the Modern Hospitality Award, which did not cover the [current] employees to the current Application, adopts a limited definition of shiftworker “for the purposes of the additional week of leave provided by the NES.”
Such a distinction is reinforced and readily identifiable, the Respondent said, by the clear terms of s.87(3) (emphasis in original text)
… which sets out the NES shiftworker entitlement for Award/Agreement free employees limits the entitlement to 5 weeks annual leave to a restricted category of shiftworker – those employees who are employed in an enterprise in which shifts are continuously rostered 24 hours a day seven days a week and who are regularly rostered to work those shifts and who regularly work on Sundays and public holidays.
Further, the Respondent said that, for s.87(1)(b)(ii) to apply, an enterprise agreement must define or describe an employee as being a shiftworker who is entitled to the NES shiftworker entitlement. As well, it was submitted that where an agreement covers various categories of shiftworker but only provides that a certain or limited category of shiftworker is entitled to 5 weeks annual leave, such an agreement should be interpreted as implying the relevant definition of shiftworker for the purposes of the NES as applying only to those employees who are entitled to 5 weeks annual leave.
In support of this last submission, and more generally, the Respondent noted a number of decisions by Fair Work Australia and the Fair Work Commission, all of which are relevantly to the effect that distinctions between categories of shiftworker, which consequently result in different leave entitlements, are permissible under the Act.[7]
[7] See, for example, Seventh-Day Adventist Aged Care (South Queensland) Ltd [2011] FWA 5103 (Commissioner Hampton) at [32]; Australian Medical Association and others [2013] FWC 2182 (Vice President Watson) at [53] “In my view the notion of an extra week of annual leave provided in the NES is intended to be a benefit provided to employees who generally satisfy a common test, although a case may exist for varying that test with respect to particular areas of employment.” Victorian Hospitals’ Industrial Association [2010] FWA 3724 (Vice President Watson) at [11] & [15].
Respondent’s Supplementary Submissions
It is sufficient to note the following from the supplementary submissions, filed 10th July and 17th September 2014.
First, even if a provision in legislation is required to receive a liberal and beneficial construction, a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural.[8]
[8] IW v City of Perth (1997) 191 CLR 1 at p. 12 (Brennan CJ & McHugh J). The Respondent gives the incorrect page citation.
Secondly, in the current matter, no such beneficial construction was or is necessary because the terms of s.87, and those set out in the agreement, are patently clear.
Thirdly, the Respondent says that the terms of s.87 do not envisage that all employees who are shiftworkers are entitled to 5 weeks of annual leave. Rather, the section itself recognises that there are different categories of shiftworkers, and specifically limits the NES shiftworker entitlements “to those who are identified by their applicable modern award or enterprise agreement as being shiftworkers for the purposes of the NES (ss.87(1)(b)(i) and 87(1)(b)(ii)) and to those award/agreement free employees who qualify for the shiftworker annual leave entitlement under s.87(3).”
Fourthly, the Respondent also says that s.87 could have been drafted in such a way that all employees who are shiftworkers would be entitled to 5 weeks of annual leave, but it was not so drafted, and therefore, it clearly was not the intention of the legislature to provide for what would be, in effect, a blanket provision that covered all shiftworkers, regardless of the nature of their employment.
Fifthly, the construction of s.87 must properly start with the ‘natural and ordinary’ meaning of the words used. In accordance with the principles set out in cases such a Wanneroo No.2 (noted earlier, and later, in these reasons) the words (of the section and the agreement in particular) are to be read as a whole and in their proper context.
Finally, unlike the position in Wanneroo (No.1) where there was “fractured and illogical prose”, the agreement in the current matter is clearly expressed; there are no drafting errors. The plain and ordinary meaning of its terms should be given due effect.
Outline of Principle
Because the issue before the Court is essentially a question of construction, it is apposite to outline in detail relevant principle in relation to the construction and interpretation of (a) legislation and (b) awards and agreements, before then determining the discrete issue in question.
Interpretation of Legislation
In addition to the terms and operation of s.15AA of the Acts Interpretation Act 1901, which requires (as the preferred approach) an interpretation of the provision of an Act that would promote the purpose or object underlying the Act, the relevant and now long-standing reference points in relation to the interpretation of legislation are the High Court decisions in Project Blue Sky Inc v Australian Broadcasting Authority and CIC Insurance Ltd v Bankstown Football Club Ltd.[9]
[9] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384.
In Project Blue Sky, the High Court (McHugh, Gummow, Kirby and Hayne JJ) said (internal citations omitted):[10]
… the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.
[10] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at p.384.
Earlier, in CIC Insurance, the Court (Brennan CJ, Dawson, Toohey and Gummow JJ) said (internal citations omitted):[11]
Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses “context” in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy…
[11] CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at p.408.
More recently, in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory), French CJ summarised the position as follows:[12]
The starting point in consideration … is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. … In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy.
[12] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at [4]. More recently, all to similar effect referring to the earlier authorities mentioned, see Certain Lloyd’s Underwriters Subscribing to Contract No. IH00AAQS v Cross (2012) 248 CLR 378 at [23] – [26] (French CJ & Hayne J), at [88] – [89] (Kiefel J); Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 at [41] (French CJ & Crennan J); Kline v Office to the Governor-General (2013) 249 CLR 654 at [32] (French CJ, Crennan, Kiefel & Bell JJ); Alphapharm Pty Ltd v Lundbeck [2014] HCA 42 at [39] & [62] (Crennan, Bell & Gageler JJ).
The joint judgment of Hayne, Heydon, Crennan and Kiefel JJ in Alcan (NT), at [47], provides a slightly more detailed summary, but to similar effect, thus (internal citations omitted):
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
Subject to a more detailed discussion later in these reasons, in my view, the construction of s.87(1)(b)(ii) proposed by the Respondent most clearly conforms to the principles just outlined. As noted earlier in these reasons, the Respondent submitted that the words “for the purposes of the NES” have been inserted into s.87(1)(b)(ii) deliberately and for a specific reason; accordingly, the words must be given proper consideration in the interpretation of the agreement.[13] The Respondent submitted that the object and intent of the words “for the purposes of the NES” in s.87(1)(b)(ii) is to limit the NES shiftworker entitlement to an additional week of annual leave only to those employees who are identified by their enterprise agreement as being a shiftworker “for the purposes of the NES.” I agree with and accept this submission.
[13] The same argument must also apply to s.196 where the same words appear.
Interpretation of Awards & Agreements
The following authorities of long-standing, and of very recent provenance from the Full Court of the Federal Court of Australia, are the relevant touchstones for the construction and interpretation of awards and agreements.
The first points of reference are the two judgments of French J, as his Honour then was, in City of Wanneroo v Holmes (Wanneroo No.1) and City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (Wanneroo No.2).[14] It is sufficient to refer in detail to the comments of his Honour in Wanneroo No.2.
[14] City of Wanneroo v Holmes (1989) 30 IR 362; City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426.
Thus, French J said, at [53] (internal citations omitted):
The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘... the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’…
Then at [54] - [56], his Honour referred to the Acts Interpretation Act (1901) [ss.15AA and 15AB], and a number of High Court (e.g. CIC Insurance Ltd) and Federal Court authorities. At [57], French J said:
It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities – City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’
In a very recent decision, the Full Court of the Federal Court of Australia outlined at a little length the following principles in relation to the interpretation of awards and industrial agreements. In Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd (“TWU v Coles”), at [39] and [40], the Full Court (Siopis, Buchanan and Flick JJ) said (emphasis added):[15]
[15] Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148.
[39] In Kucks v CSR Ltd (1996) 66 IR 182 (“Kucks”), Madgwick J said (in a passage, the first part of which is frequently quoted, but the second part less so):
Legal principles
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.
[40] Although those observations were made in relation to the construction of awards they have been treated as a useful statement about the construction also of industrial Agreements. They remain relevant in that context provided that the construction of “Agreements” made and certified under the FW Act does not become diverted by any assumption (which might once have been justified when industrial Agreements were entirely consensual – and made between employers and unions) that they should be treated as a form of bargain between agreeing parties. As a Full Court pointed out recently in Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84 [“Toyota Motor Corporation”]:
[88] ... Under the FW Act, an enterprise Agreement is an Agreement in name only. Those who, by s 172(2), are empowered to “make” an enterprise Agreement are the employer and “the employees who are employed at the time the Agreement is made and who will be covered by the Agreement”. A contract lawyer would assume that those persons would be parties to the Agreement, and that the assent of all of them would be necessary for the Agreement to be “made”. But the lawyer would be wrong on both counts. The FW Act does not identify the employer, or any employee, as a “party” to an enterprise Agreement. Further, notwithstanding the specific empowering terms of s 172, it is not necessary for all the employees who are employed at the time an Agreement is made and who will be covered by the Agreement to assent to the terms of the Agreement. Once a majority of those employees have agreed by voting, the Agreement must be sent to the Commission for approval and, if approved, thenceforth applies to all the employees in the relevant group, even those who did not agree, and even those, subsequently taken into employment, who were not part of the relevant group at the time the vote was taken under s 182.
In Woolworths Ltd v Shop, Distributive and Allied Employees’ Association (“Woolworths v SDA”), the Full Court (Greenwood & Buchanan JJ; Bromberg J agreeing in part) dealt with the inter-play between an enterprise agreement and the NES in circumstances where [state] legislation provided for additional entitlements for employees.[16] In the course of that discussion, Greenwood J said, at [6] (emphasis in original):
The Standards [the NES] have effect subject to terms (as contemplated by s 55(2)) included in any enterprise Agreement that might be made under the Fair Work Act: s 55(3). However, no provision of the Standards can be excluded by an enterprise Agreement: s 55(1). An enterprise Agreement may include terms ancillary or incidental to the operation of an employee’s entitlement under the Standards or terms that supplement the Standards, but only to the extent that the effect of those terms is “not detrimental to any employee in any respect when compared to the [Standards]” [emphasis added]: s 55(4).
[16] Woolworths Ltd v Shop, Distributive and Allied Employees’ Association (2013) 217 FCR 31 (“Woolworths v SDA”). See also the general comments of Murphy J in United Firefighters Union of Australia v Country Fire Authority (2014) 218 FCR 210 at [160] – [171], [175], [197] – [209] and [241], regarding terms in an enterprise Agreement which were held to be not inconsistent with relevant provisions of the FW Act.
For his part (with whom Greenwood J agreed) Buchanan J noted, at [26] (emphasis added), that “under the FW Act the agreement may not be given an operation which reduces entitlements under the National Employment Standards.” Thereafter, his Honour’s judgment dealt with “the claim”, which Buchanan J said, at [40], “depends on the operation and terms of the Agreement.”
Again I note advisedly that in the current matter there is no reduction of entitlements, against which Buchanan J cautioned. The matter in issue relates to the non-continuously employed shiftworkers’ entitlement to an extra week of annual leave.
At first instance, the trial Judge in Woolworths v SDA (Barker J) said, at [78], in terms that appear not to have been challenged on appeal (emphasis added):[17]
… the question whether or not a modern award or enterprise Agreement excludes the NES or a provision of the NES for the purposes of s 55(1) of the FW Act, is not to be determined simply by assessing or trying to assess whether there is a practical inconsistency, as Woolworths puts it, between the benefits realisable under the award or Agreement compared with what the position might otherwise be. Either an award or Agreement will, by its terms, be found to exclude the NES or a provision of the NES or it will not. It may be that exclusion will be found where the effect of the Agreement or one of [sic] more of its terms is to exclude the NES or a provision of them.
[17] Shop, Distributive and Allied Employees’ Association v Woolworths Ltd [2012] FCA 540.
The issue on appeal in Woolworths v SDA, as dealt with by the Full Court, was the interpretation of the relevant enterprise agreement in the light of the operation of the NES and certain state legislation.
And in the Toyota Motor Corporation case, at [89] (quoted by the Full Court in TWU v Coles at [40]), the Court said (emphasis added):
… The effect of the legislation is to empower the employer and the relevant majority of its employees to specify terms which will apply to the employment of all employees in the area of work concerned. The legal efficacy of those terms will arise under statute, not contract, and, as mentioned above, will be felt also by those who did not agree to them….
Finally, in TWU v Coles, the Full Court said, at [46]:
… giving primacy to the text does not deny the importance of understanding the context in which an instrument is made, and which it is intended to address, nor the utility of bearing in mind the facts as they are known at the time the instrument is drafted.
Again by way of summary, with more detailed discussion below, in my view (a) the agreement does not offend the Act because it does not expressly or otherwise purport to exclude the NES, (b) the terms of the agreement are clear and unambiguous in their operation and effect, and (c) the terms of the agreement do not, either expressly or by their effect, limit or reduce the entitlements of workers employed under it.
The Statutory Framework
Sequentially, other than the objects set out in s.3, the terms of the Act relevant to the current dispute between the parties should be taken to be as follows.
Chapter 2 of the Act details matters pertaining to “terms and conditions of employment.” Of Chapter 2 generally, in Toyota Motor Corporation v Marmara the Full Court said, at [14] (emphasis added):
Chapter 2 of the FW Act deals with the subject “Terms and Conditions of Employment”. It is divided into nine parts, Part 2-4 being concerned with “Enterprise Agreements”. On any view, the establishment of terms and conditions of employment by enterprise Agreement is a central pillar of the regulatory regime established by the FW Act.
Division 3 of this Chapter (s.55 in particular) deals with the interaction between, inter alia, the National Employment Standards (set out in Part 2-2 of the Act) and enterprise agreements. Sections 55 and 56 are in the following terms (emphasis in original):
National Employment Standards must not be excluded
55 (1) A modern award or enterprise Agreement must not exclude the National Employment Standards or any provision of the National Employment Standards.
Terms expressly permitted by Part 2‑2 or regulations may be included
(2) A modern award or enterprise Agreement may include any terms that the award or Agreement is expressly permitted to include:
(a) by a provision of Part 2‑2 (which deals with the National Employment Standards); or
(b) by regulations made for the purposes of section 127.
(3) The National Employment Standards have effect subject to terms included in a modern award or enterprise Agreement as referred to in subsection (2).
Ancillary and supplementary terms may be included
(4) A modern award or enterprise Agreement may also include the following kinds of terms:
(a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards;
(b) terms that supplement the National Employment Standards;
but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.
Note 1: Ancillary or incidental terms permitted by paragraph (a) include (for example) terms:
(a) under which, instead of taking paid annual leave at the rate of pay required by section 90, an employee may take twice as much leave at half that rate of pay; or
(b) that specify when payment under section 90 for paid annual leave must be made.
Note 2: Supplementary terms permitted by paragraph (b) include (for example) terms:
(a) that increase the amount of paid annual leave to which an employee is entitled beyond the number of weeks that applies under section 87; or
(b) that provide for an employee to be paid for taking a period of paid annual leave or paid/personal carer’s leave at a rate of pay that is higher than the employee’s base rate of pay (which is the rate required by sections 90 and 99).
Enterprise Agreements may include terms that have the same effect as provisions of the National Employment Standards
(5) An enterprise Agreement may include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards, whether or not ancillary or supplementary terms are included as referred to in subsection (4).
(6) To avoid doubt, if a modern award includes terms permitted by subsection (4), or an enterprise Agreement includes terms permitted by subsection (4) or (5), then, to the extent that the terms give an employee an entitlement (the award or Agreement entitlement) that is the same as an entitlement (the NES entitlement) of the employee under the National Employment Standards:
(a) those terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit; and
(b) the provisions of the National Employment Standards relating to the NES entitlement apply, as a minimum standard, to the award or Agreement entitlement.
Terms permitted by subsection (4) or (5) do not contravene subsection (1)
(7) To the extent that a term of a modern award or enterprise Agreement is permitted by subsection (4) or (5), the term does not contravene subsection (1).
56 Terms of a modern award or enterprise Agreement contravening section 55 have no effect
A term of a modern award or enterprise Agreement has no effect to the extent that it contravenes section 55.
The National Employment Standards (“the NES”) are set out in Part 2-2 of the Act. Section 61 of the Act provides:
(1) This Part sets minimum standards that apply to the employment of employees which cannot be displaced, even if an enterprise Agreement includes terms of the kind referred to in subsection 55(5).
Note: Subsection 55(5) allows enterprise Agreements to include terms that have the same (or substantially the same) effect as provisions of the National Employment Standards.
(2) The minimum standards relate to the following matters:
(a) maximum weekly hours (Division 3);
(b) requests for flexible working arrangements (Division 4);
(c) parental leave and related entitlements (Division 5);
(d) annual leave (Division 6);
(e) personal/carer’s leave and compassionate leave (Division 7);
(f) community service leave (Division 8);
(g) long service leave (Division 9);
(h) public holidays (Division 10);
(i) notice of termination and redundancy pay (Division 11);
(j) Fair Work Information Statement (Division 12).
(3) Divisions 3 to 12 constitute the National Employment Standards.
As s.61(2)(d) states, Division 6 concerns “annual leave.” Section 86 provides that this Division “applies to employees, other than casual employees.”
The section the subject of the current Application, s.87(1)(b)(ii), is found in Division 6. Although set out earlier in these reasons, for ease of reference, I set it out again, thus:
(1) For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
(b) 5 weeks of paid annual leave, if:
…
(ii) an enterprise Agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards; or
…
Part 2-4 of the Act deals with enterprise agreements. Such agreements are defined in s.12.[18] Sections 171 and 172 deal, respectively, with “the objects of this Part”, and the making of an enterprise agreement. Relevantly, s.172(1)(a) provides:[19]
[18] As earlier noted, there are many cases that deal with the interpretation of such Agreements, perhaps most relevantly Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; Veolia Transport Sydney Pty Ltd v Mifsud [2012] FCA 1472 (Flick J); Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCAFC 148 (Siopis, Buchanan, Flick JJ).
[19] Section 172(2) deals with “single-enterprise agreements”, which is the relevant classification of the Agreement in the current proceeding.
Enterprise agreements may be made about permitted matters
(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:
(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;
No one addressed either of these sections - ss.171 and 172 - in the course of any submissions (oral or written) provided to the Court.
Division 4 of this Part deals with the bargaining and approval process for such agreements, which includes [ultimately] approval, pursuant to ss.186-187, by the Fair Work Commission. Section 186(2) relevantly provides (emphasis added):
(2) The FWC must be satisfied that:
(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and
(b) if the agreement is a multi‑enterprise agreement:
(i) the agreement has been genuinely agreed to by each employer covered by the agreement; and
(ii) no person coerced, or threatened to coerce, any of the employers to make the agreement; and
(c) the terms of the agreement do not contravene section 55 (which deals with the interaction between the National Employment Standards and enterprise agreements etc.); and
(d) the agreement passes the better off overall test.
And s.187 refers to additional requirements that must be met before the Fair Work Commission approves an enterprise agreement. Section 187(4) provides:
Requirements relating to particular kinds of employees
(4) The FWC must be satisfied as referred to in any provisions of Subdivision E of this Division that apply in relation to the agreement.
Note: Subdivision E of this Division deals with approval requirements relating to particular kinds of employees.
Subdivision E refers to particular kinds of employees, notably shiftworkers, in s.196. That section provides:
(1) This section applies if:
(a) an employee is covered by an enterprise agreement; and
(b) a modern award that is in operation and covers the employee defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
Shiftworkers and the National Employment Standards
(2) The FWC must be satisfied that the agreement defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
Note: Section 87 provides an employee with an entitlement to 5 weeks of paid annual leave if an enterprise agreement that applies to the employee defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.
I further observe that no one referred to or otherwise commented on the identical wording in s.87 and s.196 of the Act. Presumably it was no mere drafting oversight, or thoughtless duplication, that the same words are used in both sections. Put another way, presumably it was deliberate to include the same terms (i.e. “defines or describes the employee as a shiftworker for the purposes of the National Employment Standards”) in both sections, that the words are not intended to be mere surplusage, and that they have genuine work to do in the operation and application of those sections.
I confirm my earlier view that all of the words in s.87 are clear and unambiguous. Their clear intent and purpose must be given effect.
Also not referred to in any submission are those sections of the FW Act that provide for the variation of enterprise agreements (ss.209 – 211), and the capacity, pursuant to s.217, to vary an enterprise agreement in order to remove an ambiguity or uncertainty. There is no suggestion that any such application has been made by either party to the current proceeding, or anyone else for that matter, as contemplated by the section.
Finally, although no party referred to or relied upon it, for the sake of completeness, I simply record the following from the Explanatory Memorandum (“the EM”) in relation to s.87. Clauses 363, 364 and 367 of the EM provide as follows (emphases added):
363. The minimum entitlement to paid annual leave is four weeks for each year of service, unless the employee is a shiftworker, in which case the employee is entitled to a minimum of five weeks’ paid annual leave for each year of service (subclause 87(1)). Leave accrues progressively according to an employee’s ordinary hours of work and is cumulative (subclause 87(2)). (The meaning of ordinary hours of work is outlined at the beginning of this Part.)
364. The additional week of leave for shiftworkers applies where:
· a modern award or enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the NES;
367. The entitlement to annual leave set out in this clause is a minimum entitlement and does not prevent an employer and employee from agreeing to, or an award or enterprise agreement providing for, a more generous entitlement.
There is nothing in the EM that could or should detract from the clear words of s.87(1). Indeed, the EM further supports the clear and unambiguous operation of that section.
Consideration
In relation to the agreement, I note the following.
In the context of admittedly different legislative regimes, the High Court has consistently affirmed, as a point of general principle, the freedom, capacity and entitlement of parties to an industrial agreement to agree on its terms. Thus, in CFMEU v AIRC, the Court said, at [34]:[20]
The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award.
[20] Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645.
In Amcor v CFMEU, at [2], Gleeson CJ and McHugh J said:[21]
The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation.
[21] Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241.
In the same case, after referring with approval to the comments from the Federal Court in Kucks referred to earlier in these reasons, Callinan J said, at [131]:
An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties….
Respectfully, the comments of Callinan J have something of a more recent expression in the objects of the Act generally (e.g. s.3), and particularly the objects set out in s.171 in relation to making an enterprise agreement.[22]
[22] In Amcor at [134], Callinan J also commented on employees suffering no disadvantage in the context of the making of the relevant Agreement. In this regard generally, inter alia, see s.186(2)(d) which provides certain requirements for the approval of an enterprise Agreement where it passes the better off overall test.
In my view, the terms of the agreement, approved by Fair Work Australia on 31st May 2011, are clear and without ambiguity. I have earlier observed that among other signatories to it are the Secretary (Greater NSW Branch) of the Australian Workers’ Union, and the ACT Branch Secretary of United Voice, the Applicant in the current proceeding. No point was made by the Respondent, and nor do I, other than to observe that there is something curious (to put it neutrally) for a signatory from a representative body to an agreement in 2011, in 2014 to challenge certain terms in that same agreement. Presumably before signing, and given its experience in such matters, United Voice took relevant advice, but only now seeks to challenge certain terms in the agreement.[23]
[23] The Agreement has/had a nominal expiry date of 30th April 2014.
Having regard to the principles articulated by French J in Wanneroo No.2 and by the Full Court in TWU v Coles in relation to giving the ordinary meaning to words in an agreement, and having proper regard to the contextual considerations and industrial realities, in my view, the definitions of “shiftworker” in cl.7 of the agreement are not only clear but also make common sense in distinguishing between employees who are required to undertake different shifts over different periods of time. With my emphasis, the non-continuous shiftworker “does not continuously work shifts over 7 days a week, 24 hours per day including working public holidays and weekends.” On the other hand (also with my emphasis), a “continuous shiftworker” “continuously [does] work shifts over 7 days per week, 24 hours per day and works public holidays and weekends.”
I have already remarked that, in my view, it would be discriminatory to those employees who are employed as “continuous shiftworkers” and who, by virtue of the requirements of their position, have certain entitlements, such as an extra week of annual leave, to have the same benefits conferred on employees who are employed on a different basis. In the Applicant’s submissions, employees who are not employed on a continuous basis should nonetheless have the same entitlement as those who are employed on a continuous basis, and who do not continuously work shifts over the periods specified in the agreement.
Also clear in the agreement is clause 30 which outlines the annual leave entitlements.
On its face, there is no ambiguity or uncertainty in relation to the distinctions made, and the definitions provided, in the agreement.
Further, in the light of the objects of Part 2-4 of the Act regarding enterprise agreements set out in s.171, and further the terms of s.172(1)(a) (set out earlier in these reasons), in my view there was no impediment (for the purposes of those sections at least) in providing the distinctions between shiftworkers that are set out in the agreement, and thereby conferring or providing for different annual leave entitlements for the different categories of shiftworkers. This must be the case, in my view, where the agreement does not, either in its terms or in its effect, reduce any entitlement of any worker employed under it.
Indeed, s.172(1)(a) refers to, and expressly authorises, an enterprise agreement containing provisions that deal with “permitted matters”. Among those “permitted matters” are “matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement.”
In my view, the entitlements of employees, such as annual leave, must properly be one of the many things contemplated as being “permitted matters” contained in an enterprise agreement by s.172(1)(a). In this regard, subject to what follows, it must surely be permissible for parties to agree upon relevant distinctions between employees based, for example, on the nature and classification of their employment (e.g. those employed on a continuous basis and those who are not), which ultimately are reflected in certain distinctions in entitlements.
Out of the list of questions posed by the parties for the Court’s determination, in my view, the question that most directly outlines the matter most appropriately to be addressed by the Court in the light of the Application and the Third Amended Statement of Claim is the final one posed by the Respondent, thus:
In circumstances where an enterprise agreement, on its terms, distinguishes between classes or categories of shiftworkers and provides that not all shiftworkers covered by the Agreement are entitled to 5 weeks annual leave but restricts that entitlement to a certain class or category of shiftworker - does that enterprise agreement contravene the Fair Work Act 2009 by failing to provide that all shiftworkers are entitled to 5 weeks annual leave per year of service?
This question must be answered “no.” In addition to comments earlier in these reasons, the negative answer is based on the following reasons: (a) the interaction between the impugned clauses of the agreement (and the terms of the agreement more generally) and s.55 of the Act; and (b) the construction of s.87(1)(b)(ii). In relation to the former, the agreement does not, expressly or impliedly, exclude the NES. Further, the agreement does not reduce any entitlement of any worker employed under it. In relation to the latter, the construction urged on the Court by the Respondent clearly adheres to the precepts of construction set out by the High Court in cases such as Alcan (NT). I accept the Respondent’s arguments in relation to the proper construction of s.87(1)(b)(ii). It is not appropriate to exclude, or to have no regard to, any of the words in it, including the specific reference to “… and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards.”
Earlier in these reasons I set out some brief comments by Greenwood J in Woolworths v SDA. For ease of reference I set them out again (emphasis in original):[24]
The Standards [the NES] have effect subject to terms (as contemplated by s 55(2)) included in any enterprise agreement that might be made under the Fair Work Act: s 55(3). However, no provision of the Standards can be excluded by an enterprise Agreement: s 55(1). An enterprise agreement may include terms ancillary or incidental to the operation of an employee’s entitlement under the Standards or terms that supplement the Standards, but only to the extent that the effect of those terms is “not detrimental to any employee in any respect when compared to the [Standards]” [emphasis added]: s 55(4).
[24] Woolworths Ltd v Shop, Distributive and Allied Employees’ Association (2013) 217 FCR 31 at [6].
Also for ease of reference, it is important to record again the succinct comment by Buchanan J in the same case. At [26], his Honour said (emphasis added): “… under the FW Act the agreement may not be given an operation which reduces entitlements under the National Employment Standards.”
Strictly speaking, and subject to what is said below, in accordance with the terms of the agreement, there is no reduction of any entitlement at all. Under the agreement, shiftworkers who are employed on a non-continuous basis, remain entitled to four weeks annual leave. There is no reduction in their entitlement. Likewise, under the agreement, shiftworkers who are employed on a continuous basis and who are required to work the extensive shifts set out in it, are entitled to one extra week of annual leave. There is no reduction in their entitlement. The agreement simply recognises different categories of workers. Pursuant to the terms of the agreement, neither category of worker has any of their entitlements reduced. Accordingly, on this analysis of the agreement, and in the light of the comments of both Greenwood and Buchanan JJ, there is no reduction of any entitlement. Rather, each category of shiftworker receives exactly what he or she is entitled to receive. Therefore, there cannot be any contravention of s.87(1)(b)(ii) by the terms or operation of the agreement.
Before moving to consider s.87(1) further, I should also say that the comments of Barker J at first instance in SDA v Woolworths (also quoted above) and not (as I read the judgment) the subject of adverse comment by the Full Court on appeal, remain apposite. Again for ease of reference, I set out his Honour’s remarks. At [78], in terms that appear not to have been challenged on appeal (emphasis added):[25]
… the question whether or not a modern award or enterprise agreement excludes the NES or a provision of the NES for the purposes of s 55(1) of the FW Act, is not to be determined simply by assessing or trying to assess whether there is a practical inconsistency, as Woolworths puts it, between the benefits realisable under the award or Agreement compared with what the position might otherwise be. Either an award or agreement will, by its terms, be found to exclude the NES or a provision of the NES or it will not. It may be that exclusion will be found where the effect of the agreement or one of more of its terms is to exclude the NES or a provision of them.
[25] Shop, Distributive and Allied Employees’ Association v Woolworths Ltd [2012] FCA 540.
Applying those comments to the current agreement (and agreed statement of facts), there is no statement that purports to exclude the NES.
In relation to s.87(1), I note the following.
The section must be considered in the context and terms of s.196 (which refers to approval requirements specifically in relation to “shiftworkers”), precisely because of the internal notation in the latter provision which refers to the former, and because of the identical terminology used in both sections.
The terms of the section are clear. Section 87(1)(b)(ii) provides:
(1) For each year of service with his or her employer, an employee is entitled to:
(a) 4 weeks of paid annual leave; or
(b) 5 weeks of paid annual leave, if:
… (ii) an enterprise agreement applies to the employee and defines or describes the employee as a shiftworker for the purposes of the National Employment Standards…
On its face, the terms of s.87(1)(b)(ii) define an employee “as a shiftworker for the purposes of the National Employment Standards.” The construction of this section urged on the Court by the Applicant would require the Court to ignore, excise or delete the words “for the purposes of the National Employment Standards.” That is not a task the Court could or should undertake.
Further, to follow such a course would correspondingly require the Court to take the same course in relation to the same words in s.196(2). That, too, is not a task the Court should undertake.
The Court may properly consider that the legislature intended that effect be given to all the words set out in both s.87(1)(b)(ii) and in s.196(2). There is nothing illogical or repugnant about them. They ought not be excised (or ignored) so that certain employees who are described in the agreement as being employed as “non-continuous shiftworkers” should receive the same annual leave entitlements as workers who are employed as “continuous shiftworkers.” This being so, and in the light of the authorities to which I have earlier referred, it was open to the parties to agree upon the terms set out in the agreement. None of them are repugnant to the NES, or otherwise contrary to the terms of the Act.
Should it formally be necessary, for the sake of completeness, I should also be taken to accept the submissions made on behalf of the Respondent concerning both the agreement, and in relation to the construction of s.87(1)(b)(ii).
Conclusion and Disposition
What follows is decidedly repetitious; nonetheless, I record the following by way of conclusion.
Having regard to the clear meaning and intent of the text of s.87(1)(b)(ii), in my view there is neither ambiguity nor inconsistency in its operation and effect. Should it also be necessary to observe, there is nothing in the High Court’s comments, for example in Alcan (NT), that would authorise a Court, in the face of clearly drafted legislation, either to ignore or to excise certain parts of it (as submitted by the Applicant) in order to give a beneficial construction to its import and effect. Indeed, the authority cited by the Applicant, Bortolazzo (Heerey J), distinguished and cautioned against a “liberal interpretation”, on the one hand, and rewriting a statute, on the other.
In accordance with the authorities regarding the interpretation of awards and agreements, notably Wanneroo No.2 (French J), Kucks (Madgwick J) cited with approval by Callinan J in Amcor, and by the Full Court of the Federal Court of Australia in TWU v Coles, in my view, (a) there are no infelicities, absurdities, illogicalities or apparent inconsistencies in the agreement; and (b) the agreement was concluded by persons with a “practical bent of mind” and who were clearly cognisant of the “industrial realities” given that at least two of the signatories were unions who may reasonably be taken to have relevant expertise and experience in negotiating and concluding such agreements on behalf of their respective members
Further, in accordance with the same authorities, to which may be added the Full Court decision in Toyota Motor Corporation v Marmara, the Court is not free to give effect to some anteriorly [or, in my view, posteriorly] derived notion of what would be fair or just “regardless of what has been written into the award [or agreement].”
Should it be formally relevant to do so, I note [again] that Fair Work Australia approved the agreement the subject of the current proceeding. While it does not ineluctably follow that a Court would or should agree with the assessment of the Fair Work Commission regarding the approval of agreements without proper consideration, in my view, it is nonetheless a proper consideration for the Court in applications before it to have regard to the approval process in accordance with the Act (s.172), and to the conclusion by the FWC.
Finally, as noted earlier in these reasons, at [68] and the notes thereto, there are a number of decisions from FWA that have clearly identified and distinguished between different categories of workers. Clearly, FWA sees no repugnance to or inconsistency with such distinctions under the Act. I have not been advised of any formal challenge to this approach by FWA.
For these reasons, the Application (filed 14th May 2013) and Statement of Claim (in all of its iterations, culminating in the Third Amended Statement of Claim, filed 14th March 2014), should be dismissed.
I certify that the preceding one hundred and forty-five (145) paragraphs are a true copy of the reasons for judgment of Judge Neville
Associate:
Date: 27th November 2014